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Nonprofit Know-how: Lessons from the field in forming charities

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Ruck ‘N’ Run, an annual walk/run fundraiser held in Republic, completed its fourth edition over Veterans Day weekend. But there was a new element in place for the Nov. 10 event, as it was completed for the first time with the organizer operating as a nonprofit.

Ruck ‘N’ Run Inc. founder George Fuller said it took him several years to make the move to nonprofit status. Doing so brought a sense of legitimacy to the organization, he said.

According to Drury University’s Center for Nonprofit Leadership, about 2,650 nonprofits exist in Greene County and 59,000 are in Missouri.

Over its four years, the Ruck ‘N’ Run fundraiser has received donations of $15,000 through racer registrations and 6,183 pounds of food, Fuller said. Those donations have benefitted veteran organizations Combat Boots and High Heels, a Columbia-based nonprofit, and Home at Last, a program of Springfield-based The Kitchen Inc.

Anyone can start a limited liability company or a nonprofit, Fuller said, but there’s a level of validation the organization can earn when receiving tax-exempt status with the IRS. He said Ruck ‘N’ Run Inc. went through the process Sept. 21, as he submitted a Form 1023-EZ application and a filing fee of $275. The IRS granted the organization 501(c)(3) status one week later.

“Validity and accountability are two things I thought would be beneficial to our organization,” Fuller said.
 
About time
While Ruck ‘N’ Run’s path to tax-exempt status was a quick process, the wait was significantly longer for In Time of Need Foundation Inc., which applied in early 2017, said spokesman Ben Spickard. The organization, which stemmed from hospice services offered by Phoenix Home Care Inc., was granted 501(c)(3) status April 18 this year, about 15 months after applying with Form 1023. The foundation’s mission is primarily to provide grants to those in a financial hardship as they deal with a critical illness or terminal diagnosis, Spickard said. Phoenix Home Care felt a need to organize a public charity so that families had a place to donate money on behalf of their loved ones, he added.

“By creating a foundation, then we allow ourselves to separate the foundation away from Phoenix,” Spickard said. “It allows donors to raise money to be put in the foundation and help patients if they are on Phoenix care, anybody else’s care or on no one’s care and need some help.”

Grants are available for those who fit its mission. Foundation board member Conrad Griggs said the board reviews each grant application, and they’re averaging about one per week with six granted so far. While it was required this year to file a 990 tax form, an annual financial document completed by nonprofit organizations, Spickard said there were no assets at the time. Griggs added no one is paid through the foundation and Community Foundation of the Ozarks Inc. handles administration of In Time of Need’s fund. Both Spickard and Griggs declined to disclose the current fund total for the foundation.

According to the IRS, the 1023-EZ document is three pages long, compared with the standard 26 pages for Form 1023, which has a fee of $600. Most organizations with gross receipts of $50,000 or less and assets of $250,000 or less are eligible for the 1023-EZ.

Spickard said when In Time of Need Foundation submitted the form, there was no expectation of how long the process would take. However, he said the board, which includes Phil Melugin, Phoenix Home Care president and CEO, along with Melanie Upshaw, Phoenix Home Care’s director of hospice and pharmacy services, and Griggs with The Bank of Missouri, understood it would take a while for the longer form to be approved.

“There was no expectation, there was no urgency,” said Spickard, corporate controller with Phoenix Home Care.

For Ruck ‘N’ Run Inc., Fuller said prior to filing the paperwork, he formed a five-person board of directors. He sits on the board with his wife Ona Fuller, Josh Mathews, Meagan Duren and Tina Chambers.

Fuller is a U.S. Army sergeant first class, stationed in Washington, D.C., since 2016. He previously lived in Republic and considers it home base for the event and the organization. He noted no donations were solicited until after its 501(c)(3) status was confirmed. Since then, he said it’s only been a couple hundred dollars raised at this point.

Both Spickard and Fuller recommended others seeking tax-exempt status consult with legal and accounting professionals before filing out any paperwork. Both organizations followed that process, with Spickard adding the professional guidance makes the road easier to navigate.

“It’s not an easy status,” he said. “They just don’t give these public charity statuses away to anybody that files.”

On the rise
The nonprofit world is robustly populated, said Dan Prater, the founding executive director of Drury’s Center for Nonprofit Leadership. However, he said a registered nonprofit includes everything from social service organizations to not-for-profits, such as neighborhood associations, athletic booster clubs and credit unions. When counting what most people think of as a nonprofit – an organization working in the community to meet a need – the total in Greene County is probably closer to several hundred, Prater said.

He said nonprofits are on the rise nationwide, and depending on the region, there’s typically growth between 2-5 percent. While he’s frequently asked the question, Prater maintains there is no oversaturation of nonprofits in Springfield.

“The reality is most people are real fuzzy about nonprofits. They don’t understand them,” said Prater, who’s vacating his Drury post this month and moving to BKD LLP. “They don’t know why there’s so many.”

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